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Adam Leitman Bailey and John Desiderio

This article will review the authority given to boards of condominiums and cooperative corporations to impose and enforce fines respectively on condo unit owners and cooperative shareholder-tenants who violate building house rules. Boards of condominiums and cooperative corporations have almost unlimited powers over their buildings’ operations and the manner in which condominium unit owners and cooperative shareholders may utilize the apartments and common spaces in their buildings. Unless the conduct amounts to egregious discrimination between unit owners or shareholders similarly situated, self-dealing, or other bad faith or outright unlawful action, the business judgment rule precludes judicial second-guessing of board decision-making.[1]

Nevertheless, boards must act within the boundaries of the authority provided to them by statute and/or by their buildings’ governing documents and by-laws. For condominiums, board authority to fine unit owners and residents is grounded in the Condominium Act[2] and in each condominium’s declaration and by-laws. For a cooperative, the authority is determined by the provisions included in its certificate of incorporation, the proprietary lease, and by-laws.

Condominiums

Section 339-j of the Condominium Act grants boards express authority to impose monetary fines on “each unit owner” who does not “comply strictly” with the “bylaws, rules, regulations, resolutions and decisions adopted pursuant thereto.”[3] As further prescribed therein:

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